News from EPI › Slow economic growth raising unemployment rate

Today’s Bureau of Economic Analysis report shows that the last six months have seen an average growth rate of less than 1%, a rate of growth that fully explains why the previously declining unemployment rate reversed course in the past six months.

After hitting a low of 8.8% earlier in 2011, the unemployment rate in June reached 9.2%. Today’s GDP Picture explains why: because of the lack of spending, growth has markedly decelerated in 2011. While the economy is not in recession, a growth rate of 0.9% (the average for the first half of 2011), if sustained for the entire year, would result in an unemployment rate rising by almost a full percentage point over that time, all else equal.

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Economic Policy Institute

EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.